Should BC's current cap on rents be relaxed?

No

The Residential Tenancy Regulation allows landlords to increase rent every 12 months at a rate of inflation plus two per cent. This formula has been in effect since 2004.

If a landlord applied the formula each year from 2004 throughout 2009, a tenant's rent would have increased 21.8 per cent. During the same period, the average weekly wage in B.C. increased 16.6 per cent. Allowable rent increases are already outpacing the increase in wages.

Landlord groups are asking the Minister of Housing to change the formula so that they can pass on increases in property taxes and utilities.

The formula under Sec. 32 of the Manufactured Home Park Tenancy Regulation is inflation plus two per cent plus a proportional amount. The proportional amount is the "sum of the change in local government levies and the change in utility fees divided by the number of manufactured home sites in the . . . park".

No

There are half a million rental households in B.C., and many of those have "mom and pop" landlords rather than profession-al ones. It is unlikely that all those "mom and pop" landlords will be making reliable calculations.

If landlords need to increase rents at a higher rate, for example due to an extraordinary increase in operating expenses, they can apply under Sec. 23 of the Residential Tenancy Regulation. A dispute-resolution officer of the Residential Tenancy Branch looks at the evidence and makes the decision about what is a fair increase.

Landlords who have been in the news recently for trying to evict tenants so that they can jack up the rents, or who have applied for geographic rent increases (the argument being that all rents should be similar in any area, even if the tenant has lived in a building and paying rent for 41 years) tend to be landlords who have recently bought apartment buildings. They paid top prices for the buildings -- more than they were worth based on existing rental income -- because real-estate agents are telling them can make a good return -- they just have to get rid of existing tenants or apply for geographic rent increases!

Owners do not need to increase rents at an even faster rate -- and new owners need to stop overpaying when they buy a rental building.

Martha Lewis is executive director of the TRAC Tenant Resource and Advisory Centre.

MARG GORDON

Yes

Rent control is provincial legislation that restricts the annual rent increase allowed in B.C. to the Consumer Price Index plus two per cent. For 2010 this ceiling is set at 3.2 per cent.

Research by the B.C. Apartment Owners and Managers Association has proven that B.C.'s rent-control formula is insufficient to allow for the proper maintenance and repair of rental buildings and is inadequate to ensure the ongoing viability of B.C.'s rental stock. The average age of apartment buildings in Vancouver is 58 years old. The stock is aging and in need of major capital repairs and renovations.

The effects of rent control have in fact been exactly what can be predicted from the simplest type of supply-and-demand analysis: a housing shortage (excess demand for housing), black markets, privileges for those who happen to have a contract for a rent-controlled apartment, difficulties in getting apartments for families with children and, in many places, housing stock deterioration.

The effects of rent control are harming those it was put in place to help. Rentcontrolled units historically do not turn over, thereby not releasing the units to the market.

If higher-income tenants face a market price, and are not subsidized by their landlord, they may choose ownership. Rent controls take away housing options for tenants.

It has been shown qualitatively that under rent control, even after allowing for tenant provided maintenance, housing quality is likely to deteriorate. Moreover, it appears that little net benefit may actually be transferred to sitting tenants once the costs borne by tenants in the form of reduced housing quality or higher tenant maintenance are taken into account. Beneficiaries bear an additional cost to the extent that mobility is reduced.

In conclusion, the combined impact of HST and rent control guidelines will mean a major reduction in repairs and maintenance of rental buildings in B.C. The size of this impact affects the future viability and sustainability of the province's rental stock. It will affect the renting experience of renters who will face growing maintenance problems, reduced customer service and reduced investment in their homes.

The market is the market is the market. Leave it alone. It will sort itself out.

(prepared by Marg Gordon/CEO of the B.C. Apartment Owners and Managers Association/Vancouver Province)